Why This Aussie Firm Says Gold to 'Certainly' Hit $1,500, Maybe Even $1,900

(Kitco News) - Another bullish call on gold. Surprise, surprise. But, this Sydney-based firm sees the potential of a $200-500 rally in gold because of what’s happening in Asia.

“You have to look at the long term in gold…more people are coming into the market looking for gold and there’s not much there, so gold’s has got the potential to rally quite strongly,” Barry Dawes of Paradigm Securities told CNBC Friday.

“I think we’re certainly going to see $1,400 quite soon and I think we’ll certainly see $1,500 by year end and maybe even that $1,900.”

Positive sentiment towards the yellow metal has been prevalent with Bank of America Merrill Lynch being the latest among a slew of banks to up their gold price forecast for this year. Prices have managed to maintain strong gains with gold futures rallying some 27% since the start of the year. August Comex gold futures last traded down $6.40 at $1,355.70 an ounce.

According to Dawes, the uptick in Asian physical demand for the metal has really “tightened the market up.”

“You have to look at the long term in gold and over the last few years, we’ve seen really strong demand out of Asia and that’s really sucked out the readily available gold out of the West,” he said.

It is important to focus not only on what’s happening in Asia, Dawes continued, but at the current supply and demand dynamics of the market as well.

“If you look at jewelry demand plus central bank buying plus the ETFs, that’s bigger than mine supply and scrap supply so we’re running out of inventory,” he explained.

“We’ve got the Shanghai Index and the Dubai index – they are going to be the price setters; it’s not going to be New York anymore.”